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Tag: U.S. Attorney Patrick J. Fitzgerald

  • Illinois Forex Ponzi Schemers Get Combined Prison Sentences Of Nearly 30 Years; Feds Identify More Than 1,000 Victims Of $17 Million Swindle In Which $1 Million Went To ‘Strip Club And Restaurants’

    Charles G. Martin has been sentenced to 17 years in federal prison — and fellow Forex Ponzi schemer John E. Walsh has been sentenced to more than 12 years — in a case in which investors’ money went to pay for strippers, fine meals, fine hotels, a piano, high-end electronics, artwork, jewelry, flashy cars and private jets, prosecutors said.

    Martin, 46, formerly resided in Glencoe, Ill., and Malibu, Calif. Walsh, 63, lived in Lake Forest, Ill.

    More than 1,000 investors “worldwide” got sucked into the scheme, which gathered more than $17 million. The fraud gained a head of steam even though Martin previously had been in trouble with the National Futures Association and had been barred from being a principal in a commodities firm, prosecutors said.

    Martin and Walsh were principals of an entity known as One World Capital Group LLC.

    “One World’s trading platform operated as a front to placate customers whose margin funds were being systematically misappropriated by them,” the office of U.S. Attorney Patrick J. Fitzgerald of the Northern District of Illinois said.

    After investigators peeled back layers of the One World onion, they found that tax evasion had occurred, in addition to wire fraud and securities fraud, prosecutors said.

    U.S. District Judge Virginia Kendall ordered restitution of more than $16.9 million.

    Customers who provided money did not realize they were getting scammed out of the gate, prosecutors said. New money went to cover existing shortfalls in One World’s trading account, and tremendous sums were diverted to fuel extravagant lifestyles.

    “Credit card and bank records show that Martin spent more than $1 million at a strip club and restaurants, nearly $1 million at elite hotels and another $1 million renting flight time on private jets,” prosecutors said.  “He purchased a fleet of luxury vehicles, donated hundreds of thousands of dollars to celebrity charity events, and hired personal security guards to accompany him in public.”

    Walsh also frittered away investors’ funds to live the high life, using his One World “credit card to charge personal expenses, including more than $140,000 of jewelry,” prosecutors said.  “He also used $70,000 in One World funds for country club expenses and $1,425,000 to purchase a second home in Lake Forest.”

    About $500,000 from investors was diverted to finance a movie “that had listed Martin as a contributing producer,” prosecutors said.

    The FBI and the IRS handled the criminal probe, and the CFTC and NFA assisted, prosecutors said.

    In December 2007, the CFTC obtained a trading halt and asset freeze. At the time of the freeze, One World had only $677,932 in assets and unpaid customer liabilities of more than $17.6 million, prosecutors said.

    U.S. law enforcement has been counting victims of some individual fraud schemes in the thousands — or even the tens of thousands. The cases present unique logistical challenges because of their size and international reach.

    In some scams, criminals have used dozens of shell companies and bank accounts to funnel money, hide it or spirit it away. Reverse-engineering a single scheme can take years.

  • BULLETIN: Steven Salutric, Illinois Man Accused By SEC Last Year Of Stealing From 96-Year-Old Nursing Home Patient With Dementia, Now Charged Criminally

    BULLETIN: Federal prosecutors in the Northern District of Illinois have charged Steven W. Salutric with wire fraud, the office of U.S. Attorney Patrick J. Fitzgerald said.

    Salutric, 53, of Carol Stream, initially was charged civilly by the SEC in January 2010, amid shocking allegations that, to keep his Ponzi and fraud scheme afloat, he stole $400,000 from a 96-year-old woman with dementia who resided in a nursing home.

    The U.S. Department of Labor later sued Salutric, alleging that he illegally withdrew “more than $1 million from five pension plan client accounts from 2005 through 2009” and “jeopardized the retirement security of many workers.”

    Fitzgerald’s office now says Salutric, who co-founded an investment-advisory firm known as Results One Financial LLC, “caused about 10 clients to lose more than $4.26 million.”

    Salutric’s scheme, which in part involved dipping into client’ custodial funds at Charles Schwab & Co Inc., operated between December 2002 and January 2010, prosecutors said.

    “Salutric allegedly fraudulently obtained more than $3 million from clients by preparing, forging clients’ signatures on, and faxing documents that falsely represented to Schwab that the clients wished to transfer funds from their Schwab accounts to bank accounts held by Salutric’s personal business associates and entities in which he had a financial interest,” prosecutors said. “Salutric allegedly used at least a portion of the clients’ funds to make Ponzi-type deposits to other clients’ accounts to conceal and prolong the scheme.”

  • URGENT >> BULLETIN >> MOVING: KABOOM! Feds, SEC, CFTC Move Against Alleged U.S. Huckster Who Ran Forex Ponzi Scheme From Panama And Fled To Peru; Self-Styled ‘Christian’ Jeffery A. Lowrance Registered Business In New Zealand And Routed Ponzi Payments To And From The Netherlands, Officials Say

    URGENT >> BULLETIN >> MOVING: A U.S. citizen who told investors he was a “Christian” who shared their political philosophy of “limited government” ripped off hundreds of people in a $21 million Forex Ponzi scheme involving “fictitious trading,” used some of the cash to start an alternative newspaper, preyed on followers of U.S. Rep. Ron Paul and fled to Peru when his Panama-based scheme collapsed, U.S. officials said today.

    Jeffery A. Lowrance, 50, was arrested in Lima earlier this year. He was extradited to the United States yesterday and arraigned today on criminal charges filed in the Northern District of Illinois, federal prosecutors said. Separately, the SEC charged Lowrance with fraud in a civil complaint, as did the CFTC.

    The office of U.S. Attorney Patrick J. Fitzgerald of the Northern District of Illinois said this afternoon that Lowrance operated his Forex swindle from Panama, involving as many as 400 investors and causing losses of at least $5 million.

    Fitzgerald is perhaps the most famous prosecutor in the United States, and has served during both Republican and Democratic administrations in Washington. Lowrance was jailed in the United States today after his arraignment in Chicago on charges of wire fraud and money laundering.

    In bringing the case, government officials described Lowrance’s alleged crimes as a form of affinity fraud targeted at Christian voters with a keen interest in politics. Investigators have fretted that certain types of schemes have been designed deliberately to trade on sentiment against big government and that scammers have lined up to take advantage of the sentiment while leaving investors holding the bag.

    Investors in 26 states, including California, Oregon, Illinois and Utah, were targeted in the scam, the SEC said.

    Paul, R.-Texas, is an advocate for limited government and is a candidate in a crowded GOP field for next year’s Presidential nomination.

    During the 2008 U.S. election cycle, Lowrance showed up at a Paul political rally in Minnesota, placing a copy of a newspaper Lowrance produced with investor funds he had “secretly” diverted “on every seat at the rally,” the SEC charged.

    Even as he was touting his newspaper and his investment program at the Paul rally, the Ponzi scheme already was in a state of collapse, the SEC charged.

    And, the SEC added, Lowrance’s purported investment firm — First Capital Savings & Loan Ltd. — actually was registered in New Zealand. Investors were instructed to send money to a “money converter” in Maryland, where it was whisked overseas to the Netherlands.

    Ponzi payments were made from the Netherlands, the SEC alleged.

    A Lowrance predecessor entity known as Mentor Investing Group had been ordered by the state of California in 2006 to “cease and refrain” from selling commodities and Forex contracts, according to records.

    “[Lowrance]  used a significant portion of the money he raised from investors to fund the creation of his alternative newspaper, USA Tomorrow, which claimed to promote ‘truth in journalism’ and contained articles and advertisements advocating a limited government ideology,” the SEC charged. “He then included in at least one edition of USA Tomorrow a flyer advertising the First Capital investment opportunity which he distributed at the September 2008 Ron Paul Rally for the Republic in Minneapolis, Minnesota. USA Tomorrow was placed on every seat at the rally,” the SEC charged.

    Lowrance specifically targeted Christians and inexperienced investors in his sales pitches, the SEC charged.

    Along the way to ruin, “Lowrance and First Capital knowingly and/or recklessly made the materially false claim that First Capital used investor money to trade foreign currency and in return, pay them a high,  fixed, monthly rate of return,” the SEC charged.

    “Before February 2008, First Capital offered monthly rates of return ranging from 4% to 7.15% (resulting in annual rates of return up to 85.8%),” the SEC charged. “It also offered to pay referral fees for new investors ranging from 5% to 6% of the amount invested. As of July 2010, First Capital’s website offered monthly rates of return ranging from 1.104% to 1.558% (resulting in annual rates of up to 18.7%) and referral fees ranging from 1 % to 2%.”

    Like other investment scams, the Lowrance Forex Ponzi used “a chart and spreadsheet purporting to show its multi-year history of profitable trades,” the SEC alleged.

    But “First Capital never entered into the trades detailed on First Capital’s website,” the SEC charged. “Moreover, First Capital never was profitable.”

    Even after the scheme collapsed, Lowrance continued to solicit funds, telling some investors in early 2009 that “the millions lost [did] not shake [him],” the SEC charged.

    He urged investors that he had just acknowledged swindling to continue to have faith in him and said that he would trade foreign currency “to pay them back,” the SEC charged.

    When some of his investors told others that Lowrance had swindled them, Lowrance sent “purported updates to other investors disparaging the character of those persons who circulated his earlier admissions and disparaging the character of anyone who questioned L[o]wrance’s integrity,” the SEC charged.

    What he did not do was stop soliciting prospects for money and take his website offline. The site remained active until “at least” July 2010, despite the scheme’s 2008 collapse, the SEC charged.

    On March 5, 2009, a month after Lowrance acknowledged that investors had lost their money, the Netherlands bank account contained $121, the SEC charged.

    “In addition to failing to disclose First Capital’s true financial condition and operations to investors solicited between June 2008 and February 2009, Lowrance did not use any new investor money to trade foreign currency,” the SEC charged. “Rather, he used new investor money to pay himself, pay some 6 investors’ returns, and to pay for expenses associated with his start-up newspaper.”

    Also involved in the probe are the FBI and the IRS. Elements of the investigation were assembled by member agencies of the interagency Financial Fraud Enforcement Task Force created by President Obama in 2009.